DVD hardware penetration rose to one-quarter of all U.S. television households, and is expected to climb ten percentage points to 35% by the end of this year. New video game platforms from Microsoft (Xbox) and Nintendo (GameBoy and portable Game Boy Advance) spurred competition among the game publishers and, in turn, $6.9 billion in platform, accessory and software sales. The data was presented today by Bo Andersen, president of the home video and entertainment industry's international trade group - the Video Software Dealers Association (VSDA).

The new data, released today, is part of VSDA's sixth consecutive Annual Report on the Home Entertainment Industry. The 2002 report is a year-end recap of 2001 and includes a view-from-the-top analysis of the rapidly changing landscape of home entertainment. Main areas of the report include domestic and international DVD and VHS rental and sales data, domestic video game rental and sales data, hardware penetration rates, video retailer information, video control and piracy issues, the effects of the peer-to-peer networks on music sales, and the future of Internet video-on-demand.

"Home video is in an enviable position," said VSDA President Bo Andersen. "It is a $19 billion/year industry and growing; it enjoys a 95% hardware saturation of consumer households, new DVD technologies are reinvigorating the market, exciting new video products are released every week, video rental and retail outlets are good neighbors in virtually every community in America, and a competitive retail market drives innovation and customer service. Renting and buying movies on VHS and DVD are still the movie delivery options most preferred by consumers, and the value-for-the-dollar equation for rental and ownership will maintain these strong preferences."

Some highlights from VSDA's 2002 Annual Report include:

DVD Rentals and Hardware

- Video consumers in the United States spent an unprecedented $1.4 billion renting DVDs in 2001.

- In 2001, consumers bought 16.7 million DVD players.

- The DVD console is the fastest-selling consumer electronics product ever, having reached sales of 30 million units within five years.

- Japan, the first country to adopt DVD technology, spent an impressive $187.7 million renting DVDs.

- Buena Vista Home Entertainment's "Unbreakable" was the #1-renting DVD in 2001.

VHS Rentals and Hardware

- U.S. video consumers spent $7 billion on VHS tape rentals in 2001.

- Universal Studios Home Video's "Meet the Parents" was the #1-renting VHS title for the year.

- By year-end 2002, VCR hardware penetration will rise to 94% of all U.S. television households.

Video Game Rentals and Sell-Through Markets

- U.S. consumers spent $633.6 million renting video games in 2001, and a record-breaking $6 billion buying video game software (including PC software).

- Just over 10% of the 103 million U.S. television households, or 10.9 million homes, have high-speed Internet access (cable, satellite, DSL, fiber and wireless), while 39%, or 43.2 million, are running on dial-up modems.

- The three most significant online content providers by 2006 will be audio and video entertainment, adult entertainment, and financial and business news.

A copy of VSDA's 2002 Annual Report on the Home Entertainment Industry can be obtained by submitting a request to research@VSDA.org.

Established in 1981, the Video Software Dealers Association (VSDA) is a not-for-profit international trade association for the approximately $19 billion home entertainment industry. VSDA represents more than 1,700 companies throughout the United States, Canada and a dozen other countries. Membership comprises the full spectrum of video and video game retailers (both independents and large chains), as well as the home video divisions of major and independent motion picture studios, and other related businesses, which constitute and support the home video entertainment industry.

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